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Louis Vuitton, Dior sales jump despite a war and a pandemic

Revenue growth surpassed estimates for the world’s largest seller of luxury goods, defying the war in Ukraine and the resurgence of Covid-19 in China  

File photo: Exhibits at the inauguration of the Atelier Louis Vuitton Vendome in Vendome, France, on Feb. 22, 2022.  (Bloomberg)

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Moët Hennessy Louis Vuitton (LVMH SE)’s revenue growth surpassed estimates as the world’s largest seller of luxury goods defied disruptions from the war in Ukraine and the resurgence of Covid-19 in China.

First-quarter sales advanced 23% on an organic basis to 18 billion euros ($19.5 billion), led by LVMH’s biggest unit, fashion and leather goods, the Paris-based company said in a statement Tuesday. Analysts had expected a gain of 17%.

Led by billionaire founder Bernard Arnault, LVMH is the first European luxury-goods maker to publish revenue for the period, kicking off the reporting season on a positive note. The company said that it remains “vigilant and confident,” in the context of the current geopolitical and global health situation. The U.S. and Europe both recorded double-digit sales increases in the quarter. 

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LVMH closed its stores in Russia on March 6 following the invasion of Ukraine, a conflict that could dent consumers’ “feel-good factor” when it comes to luxury purchases, according to Telsey Advisory Group. The global shift in mood brought on by the war will probably affect high-end consumption more than a drop in spending from Russian nationals, who are estimated to account for less than 1.5% of LVMH’s sales, according to Morgan Stanley.

The company has also faced lockdowns in Shanghai as the coronavirus spread in parts of China, leading to worsening prospects for the economy and potentially for luxury sales.

Still, revenue at LVMH’s fashion and leather goods unit, which houses Louis Vuitton and Dior, soared 30%, beating analysts’ forecast for a gain of 23%.

The luxury industry has been relying on price increases to offset inflation pressures. Louis Vuitton raised prices by around 6% in the first quarter, according to Stifel estimates.

Chief Financial Officer Jean-Jacques Guiony will speak to the press later Tuesday, and his remarks will by scrutinized, especially on recent demand trends in China.

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